In a perpetual tag team match of epic proportions Flaherty and Bank of Canada Governor Mark Carney are setting up a new policy in the battle against the economy. Many now cringe at the very sight of Flaherty's name in the headlines today and fear at turning the page or clicking through to find out what he has in store for the country next. While Canadians and investors continue to shake their heads in bewilderment and continue to adjust strategy to compensate for previous changes, the finance minister maintains that he is proud of deflating the housing market in sizzling markets like Vancouver and Toronto. In the recently released federal budget it is proposed that Canadian mortgage lenders should be restricted from making loans even further, following on from strong arm moves that demanded banks raise their interest rates. The bottom line is that the proposal poses banning financial institutions that do not take deposits from loaning on residential mortgages. It will cut out those trying to make loans and hefty profits on home loans that are not under the umbrella of the Canada Mortgage & Housing Corp. The supposed goal is to limit tax payer liability if lenders go belly up in a full on housing crisis. However, this may of course have the reverse effect in putting more loans under the CHMC. Photo Credit: Earthrangers At the same time Mark Carney has been on the lecture circuit pumping up the benefits' of giving more control to the government, especially in terms of monetary policy and raising rates. His recent speech at the University of Alberta goes on to allude to the need for more control and downward pressure on spending, lending and credit for a longer period of time to moderate fluctuations. In other words it sets up the mindset to fuel support for more Flaherty rule changes. In one sense it would be great if a solution for bubbles was mastered, but revolving cycles do have their advantages providing investors are knowledgeable about them and are prepared. Unfortunately the strategies currently on the table only seem to mimic U.S. policy, and we know how well that has worked out. Some scaremongers have been attempting to stir up protest claiming that this could dramatically affect the commercial mortgage backed securities market for residential paper, eliminating some $6.7 billion. While this could mean a major slap for some lenders, overall the effects are likely to be far less worrisome. There is also a chance for potential advantages for commercial real estate investors in Canada, even if Flaherty didn't mean to help them Looking at how this played out in the U.S. there are definitely work-arounds, especially for investors. Down south many lenders now make business' loans for residential investment properties providing they won't be owner occupied. The benefits for commercial real estate investors mean more money being directed to commercial capital. This will also add to the anticipated surge in commercial investment in the second half of 2013. Some will certainly spill over into Vancouver and Toronto even though it might not be the best place for those looking for immediate cash flow or the best yields and appreciation over the next five years. However, it will prop up the CRE industry, economy and back to residential markets in those cities and provinces, helping to minimize the damage done by previous policy and new mortgage rules.